Telegraph OnTheGo

11:45AM GMT 14 Nov 2006

Good afternoon,

Vodafone is to offer mobile customers cheaper services if they accept Yahoo! adverts on their phones. The move could be seen as an early step towards a transformation in mobile companies' funding models, if Google is to be believed. Yesterday the search engine's chief executive, Eric Schmidt, predicted advertising could replace customer billing when phones are used extensively to shop and search online.

Vodafone's lower-cost, advertising-funded services will probably start with games. The phone giant unveiled the deal alongside a drop in first-half profits. Vodafone posted a pre-tax loss of £3.3bn after an £8.1bn impairment charge taken to cover a wide-ranging sell-off of parts of the empire Vodafone no longer thinks are attractive.

There has been better news than expected for those hoping interest rates will rise no further. October inflation figures came in lower than anticipated, and the number of people remortgaging their home in September fell to its lowest in five years in a sign that the housing market may be cooling. The key test will be tomorrow, when the Bank of England publishes its quarterly inflation report.